Premiership Rugby and the unions which organise the Heineken Cup may end up in court as the battle for control of European rugby's leading club competition intensifies in the biggest schism in six nations rugby for 14 years.

A TV deal with BT Vision announced by Premiership Rugby this week, which included rights to European competition, provoked a war of words with European Rugby Cup Ltd, the organisers of the Heineken and Amlin Challenge Cups, with each side accusing the other of selling the rights to a tournament that did not exist.

Premiership Rugby's TV deal and desire to change the format of the Heineken Cup are the ostensible reasons for the dispute. ERC maintains that International Rugby Board regulations do not allow clubs to negotiate television or sponsorship contracts unless their union gives them permission, and then it only applies to competitions played within their own borders. It was taking legal advice.

The English clubs, who boycotted Europe in 1998 in a dispute over who controlled the professional game, insist under the terms of an agreement with the Rugby Football Union five years ago they have the right to do their own TV deals. That deal ends in 2016, two years before the contract with BT Vision concludes, something that could be rendered invalid if the RFU took back the negotiation rights.

ERC has agreed an enhanced TV deal with Sky for the Heineken Cup to run to 2018, something Premiership Rugby which, with the leading French clubs, last June served a two-year notice for pulling out of the European tournaments, says is invalid because, with a new participation agreement to replace the one that ends in 2014 not agreed, there is nothing to sell. "What this is about is club competitions being run by clubs rather than the unions," said a Premiership source. "The Champions League is not run by the Football Association or the German federation and imagine how stupid it would be if it were. It is in everyone's interests to play together with a more even distribution of money than is currently the case.It comes down to who blinks first."

The English and French clubs say the only way to get meaningful change is to make a lot of noise, and by securing money for a European competition from BT Vision, whose chief executive Marc Watson predicted a new European competition with a "fantastic new format‚" would replace the Heineken Cup, they have the financial means to divide the other four countries that make up the ERC board, Wales, Ireland, Scotland and Italy.

ERC's stance is that Premiership Rugby is bound by corporate governance to the new Sky deal because it was part of a meeting on 6 June, as one of England's two representatives, that mandated the executive to conclude the agreement. The English clubs response is that three weeks later, on 27 June, they wrote to ERC, copying in Sky, saying the contract was invalid.

"The Heineken Cup is a tremendous tournament but the terms have to be tweaked," said the Saracens chairman, Nigel Wray. "English and French clubs have to knock each other out to get into the tournament and all the other guys stroll in. That's not right given that we provide most of the revenue. The Heineken Cup was set up by the unions and fair play to them, but the clubs in England and France must get their reward."

The ERC board meets on Tuesday in Dublinnext week to discuss a new participation agreement. England's two directors are Leicester's Peter Wheeler and the RFU's Rob Andrew. Other unions are looking to Twickenham to exert their authority over the clubs and emphasise that TV rights for cross-border regulations are not for clubs to sell under the IRB's regulation 13. The IRB can only become involved if a union makes a complaint.

The RFU's chief executive, Ian Ritchie, and the Premiership Rugby chief executive, Mark McCafferty, attended a meeting of the professional game board at Twickenhamon Thursday . Entry criteria for the Premiership was meant to be the main subject on the agenda, but the conflict in Europe dominated debate. The RFU did not give away its stance. "We are exploring the legalities around the relevant section of the agreement between PRL [Premiership Rugby] and the RFU in 2007," said a Union spokesperson. "We will continue to talk with all parties on what is a complex and fast moving set of issues, in a confidential manner. We will consider and reflect upon the situation before commenting further."